S&P rates Kerr-McGee loan BB+

Standard & Poor's said it assigned its BB+ rating and 2 recovery rating to Kerr-McGee Corp.'s $5.5 billion senior secured credit facilities and placed the rating on CreditWatch with negative implications.

The $5.5 billion senior secured credit facilities consist of the following: a $2 billion term loan X maturing in 2007, a $2.25 billion term loan B maturing in 2011 and a $1.25 billion revolving credit facility maturing in 2010.

Upon conclusion of the financing, S&P said credit measures are expected to deteriorate considerably as total debt (pro forma for the financing) to 2004 EBITDA before exploration expense (EBITDAX) nearly doubles to about 2.8x from 1.4x in 2004. Ratings incorporate the expectation of rapid debt reduction in the intermediate term. Management intends to reduce much of the debt associated with the repurchase program.

S&P said the ratings are supported by a good business position in the cyclical, volatile exploration and production segment of the oil and gas industry and attractive near-term fundamentals in the oil and gas sector. Relative to its peers, Kerr-McGee still has an attractive set of growth opportunities.

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